Quarterly online tax scheme 'not supported by ABAB'

E-mail us

Your login

Use the link below to access your online portal.


GRENKE partner portal

GRENKE customer portal

We're here for you.

Would you like to know more about our services? 

Call us on: +44 (0) 1483 4017 00

Image credit: iStock

The introduction of a new system of quarterly digital tax reporting for the UK's small businesses has come under fire, with HMRC's own oversight body failing to support the plans.

Members of the Administrative Burdens Advisory Board (ABAB) have now highlighted what the body believes to be serious deficiencies within the new tax regime, as the need to invest in new digital technologies could place an unnecessary burden on the nation's smallest firms and sole traders.

Furthermore, businesses may be faced with substantial administrative burdens that do not meld with the government's stance of reducing the legislative load on companies - a position that has been well documented following the introduction of the ongoing Red Tape Challenge at the start of the last parliament.

Introduced by HMRC as part of its Making Tax Digital initiative, the new regime aims to reduce the associated costs of tax administration by as much as £400 million per annum for firms, but questions have been raised as to how these savings will be made.

The ABAB stated in its annual report, published at the start of April: "Compulsory digital record keeping and quarterly online updates is not an approach we can endorse."

It added that the ABAB is "disappointed" with the mandate for digital record keeping and quarterly online reporting for individuals and the smallest businesses.

Responding to the announcement, national chairman of the Federation of Small Businesses (FSB) Mike Cherry said: "The writing is on the wall as more and more small businesses are making clear their concerns about this poorly thought out plan."

Indeed, research published by the FSB showed that 99.3 per cent of small businesses believe they would struggle to meet the requirement of keeping hold of their digital records due to the increased workload and higher costs of compliance that this would bring.

Mr Cherry concluded: "Forcing small firms to pay for expensive digital accounting software so they must submit extra tax returns is not going to help anyone. It will simply add to the cost of doing business in the UK.

"These proposals will also substantially increase administrative burdens - particularly for the smallest businesses."

As a result, the objective of these amendments to the current tax regime may ultimately prove self-defeating.

Not yet set to be introduced until 2018 at the earliest, the government still has time to amend its plans for digital tax reporting. However, with an ongoing push towards digitalisation taking place across all areas of public services provision at present, it remains to be seen if HMRC will respond to the worries of its own oversight body and introduce a change.